March 2023 < Back
The article authored by Dennis T. Jaffe explains the role of family values in shaping the success and longevity of family-owned businesses. Jaffe highlights the importance of expressing family values in a way that aligns with the company's mission and vision.
These values affirm the family's commitment to quality of products, service to customers, respect for employees and giving back to the community, rather than putting profits above people.
A famous example is the Massachusetts company Malden Mills, whose owner continued paying its workers after a fire destroyed its plant. A company is admired when the owners invest extra in quality, service or loyalty.
Values
There are many ways in which family values can be expressed within a family-owned business,
Companies also express values through employee behavior. Some companies hire with clearly defined behavioral expectations, and have dress codes and even morning prayers. Companies "hire for values" that they respect and admire and that help the company fulfil its values-based mission.
When family values are clearly communicated and aligned with the company's goals, it can create a cohesive family culture that promotes trust, loyalty, and commitment among family members and employees. This can lead to improved productivity, innovation, and customer satisfaction.
Potential risks
Jaffe warns of the potential risks associated with conflicting family values in the context of the social contract with the community.
Illustration: A company's owners may not be comfortable to hire young people whose appearance and work style is different from theirs, but their employees or customers may make it clear that refusing to adapt might affect the success of the business. If there is just one store and the family owners are present, this may not happen, but when there are many outlets, the company management and employees must consider adapting their values to fit a wider community.
Setting Governance
Family business owners need to create a distinction between family and business practices to ensure that the business is not considered an extension of the family. The owners establish clear policies that govern the family's relationship with the business, which may not always align with personal interests. The overall focus is to become a business-first family, emphasizing good business practices over personal interests.
The family must begin to separate some of its personal beliefs from the business, while expressing other values more directly about commerce, within the business. To thrive over generations, this differentiation may be good business and at the same time, allow the family to personally express some of its social and moral values in other areas.
In summary, the author suggests families in business to take cognisance of the merits and risks in expressing their values and the potential impact on their business.
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